Cyrus files a lawsuit against its landlords

Back in November, Healdsburg four-star restaurant Cyrus received an eviction notice from its new landlords at the Hotel Les Mars. At the time, the dust-up came a month or so after David Fink (of Mirabel Restaurant and Hotel Group) and Bill Foley bought the hotel. The particular eviction issue was resolved a few days later, with Fink asserting that it was all a misunderstanding. That was nine months ago, but things are still rocky between Cyrus and Hotel Les Mars.

Now, it appears the two sides are reaching a boiling point, as the Cyrus partnership team of Douglas Keane and Nick Peyton have filed a lawsuit against Hotel Les Mars, David Fink, and Mirabel.

The lawsuit alleges that a pattern of landlord misconduct started with the aforementioned eviction notice in October, wherein the landlord accused Cyrus of not paying rent by not telling them where to pay rent.

Then, a second eviction notice was given in February, claiming there was a breach in the lease: that the restaurant refused an inspection from the landlord. According to Cyrus’ lawsuit, no such request was refused by the restaurant. This accusation was followed by the hotel’s demand for $22,000, the security deposit that is required upon breach of lease. In other words, the hotel thinks Cyrus breached the lease and owes the hotel $22K; Cyrus disagrees and believes it is performing all obligations under the lease.

In the lawsuit, Keane and Peyton recount how the new hotel regime approached them about partnering with the hotel for room service and hotel operations, prior to purchasing the hotel. Cyrus declined the offer.

That’s a key issue to remember here: Hotel Les Mars has no bar or restaurant. Cyrus is the only kitchen there, and it’s independently operated. From the lawsuit:

17. Commencing on or about September 10, 2010, Fink and Mirabel, and then Landlord, commencing after its organization date of September 30, 2010, commenced a series of harassing acts obviously designed to intimidate Hburg into complying their demands and conspired together to devised a plan to acquire possession and control of the multi-million dollar Restaurant for free. With Hburg evicted, hotel property would be worth double the $5.2 million dollar purchase price and could operation successfully with cocktail service in the lobby, a fine dining restaurant and food and beverage room service: amenities absolutely critical to the success of any luxury hotel and services critical to retaining the Hotel’s membership in Relais & Chateaux.

And then there’s the restaurant’s accusations against Hotel Les Mars, Fink and Mirabel. There are a few landlord-tenant issues — like the assertion that the hotel has leaked water on Cyrus four times in the last several months sans no reparation.

But more interesting is the accusation that Fink is trying to acquire and/or damage the restaurant by going through the investors. From the lawsuit:

In the spring of 2011, Fink was in contact with Cyrus’ largest investors with the sole malicious purpose of damaging Cyrus. During a series of three meetings Fink had with the investors, Fink: (1) sought to obtain confidential information including Tenant’s Operating Agreement with list of all investors; (2) stated that Foley has an “army of lawyers” who can use “defaults” to deprive Tenant of its Lease and (3) falsely stated that Cyrus is mismanaged causing the investors’ investment to be at risk of total loss.

The next steps are in the courts, and a judge will decide who is right and wrong.

When reached yesterday, David Fink said he had not yet read the lawsuit and had no further comments. Expect more reactions from his side later today.

Douglas Keane explained the lawsuit thusly: “We finally had enough of getting pushed around, so we fought back,” he said. “We just want to be left alone.”